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Page added on December 25, 2011

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Oil interests push China into Sudanese mire

Public Policy

At a restaurant along the River Nile offering crocodile and ostrich meat, officials of the world’s newest — and desperately destitute — nation hosted a lunch this month for Liu Guijin, China’s visiting envoy for African affairs.

Liu’s visit to Juba, the dirt-track capital of South Sudan, which split from Sudan in July, came at a tense time: Sudan had just bombed a refugee camp, armed militias were mining roads, and troops were clashing in disputed border areas.

The Chinese envoy, however, came here mainly to talk about oil.

The Chinese “are very worried,” said Stephen Dhieu Dau, South Sudan’s minister of petroleum and mining, who attended the lunch with Liu. “Their wish is to see the continuation of production and the flow of the crude. This is their concern.”

China, which gets nearly a third of its imported crude oil from Africa, has invested billions of dollars in the past 15 years to pump crude from this war-scarred land. But the division of what until five months ago was a united country has pushed Beijing into a political minefield in defense of its assets, straining China’s “just business” insistence that it doesn’t get involved in the internal affairs of foreign lands.

China’s involvement revolves largely around the interests of a single company, the China National Petroleum Corp., or CNPC, a state-owned giant that, in its quest to match the global reach of Western oil majors and to feed China’s appetite for fuel, has dragged usually risk-averse Chinese diplomats into one of Africa’s most poisonous feuds.

Across Africa, China is getting tugged into local affairs. In Zambia, China’s involvement in mining — and its close ties to the incumbent president — dominated a September presidential election. China’s man lost. A multibillion-dollar, energy-linked Chinese loan to Ghana caused political ructions there. Leaders in Chad, meanwhile, have been struggling in recent weeks to tamp down public anger over a sudden boost in the price of gasoline produced by a new CNPC refinery near the Chadian capital.

China’s entanglement in foreign nations’ quarrels, however, is perhaps deepest in the desert and bush that flank the Nile. Here, CNPC straddles both sides of a murderously volatile fault line: between Muslim Arabs in the north and black, often Christian Africans who inhabit the south.

Most of the oil lies in the landlocked south, but the only way to get it to market is through Chinese-built pipelines that pass through the north to a Chinese-built terminal on the Red Sea.

When CNPC first took a stake in oil fields here in 1996, China placed all its chips on a brutal regime in Khartoum, selling arms and providing diplomatic cover as President Omar Hassan al-Bashir battled to crush southern rebels. With these same rebels now running ministries in Juba, China is rushing to hedge its bets, offering Khartoum’s foes in the south a package of development aid and low-interest credit that hasn’t been announced but that officials here say could be worth as much as $10 billion.

“During the struggle of the people of South Sudan, China took the side of the government in Khartoum,” said Pagan Amum, the secretary-general of the Sudan People’s Liberation Movement, or SPLM, a rebel outfit during the civil war that is now South Sudan’s ruling party. “But that is history, a troubled history, and we will not allow ourselves to be hostages of the past.”

Amum, who got invited to China last month, said that he raised this “difficult past” during a banquet in Beijing at the corporate headquarters of CNPC and that he was assured that the company wants to “sort things out, to heal” and work closely with Juba.

Pursuit of energy

In the vanguard of China’s pursuit of energy and profit overseas, CNPC began looking abroad nearly two decades ago, just as Chinese industry’s appetite for oil started to overtake domestic production. Since then the company has invested in ventures from Peru and Venezuela to Iraq and Kazakhstan.

But nowhere has CNPC poured in so much money and caused itself — and the Chinese government — so many headaches as in Sudan.

China imported more than half the oil it consumed last year, with Africa its biggest source after the Middle East. The country’s largest African supplier by far was Angola, but most of that oil was simply purchased, not produced, by Chinese companies. In the Sudan region, by contrast, CNPC — the dominant partner in foreign consortiums operating there — actually pumped the oil from the ground.

Chinese customs figures show that China imported 92 million barrels of crude from Sudan last year — or 70 percent of Sudan’s total oil exports as reported by the then united country’s Central Bank.

CNPC, thanks in part to its expansion overseas, now ranks as one of the world’s biggest energy companies. Its listed subsidiary, PetroChina, which trades on the New York Stock Exchange, has a market capitalization just behind that of ExxonMobil, America’s biggest oil company.

Though largely motivated by profit, CNPC won strong state support for its push into Sudan by presenting this and other investments abroad as a boost to China’s energy security: They reduce China’s dependence on Western oil majors that dominate production in Angola, Nigeria and elsewhere. But they’ve also left Beijing struggling to juggle often-irreconcilable interests.

“They want to be close to us and close to Khartoum. But Jesus said you cannot serve two masters,” said Dau, South Sudan’s petroleum minister. “They have to make a choice. They have to be honest and say who is right. That is what the Bible says.”

China has tried to stay neutral but gets sniped at by both sides. “It’s a dilemma for China,” said Cui Shoujun, director of the International Energy Research Center at Renmin University in Beijing. China “tries to balance the south and the north but hasn’t come up with an effective way to do this.”

Amid escalating tension across a new international border, Amum, the head of South Sudan’s ruling party, traveled to the Ethiopian capital, Addis Ababa, last month for talks with officials from Khartoum on pipeline tariffs and other issues. The African Union mediated the negotiations, but China played an active role behind the scenes trying to calm tempers.

Much more from The Washington Post



One Comment on "Oil interests push China into Sudanese mire"

  1. BillT on Mon, 26th Dec 2011 2:51 am 

    So far, China has managed to get it’s oil without invading foreign countries, unlike the US. But, it appears that this may be coming to an end. This makes the pipelines from Iran even more important to China.

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